Fuel Economy Standards: Would a Freeze Impact Innovation?

The Trump administration has issued a proposal to reverse Obama-era fuel efficiency standards and prohibit states like California from setting their own stricter standards. Aside from the environmental implications, such a move could negatively impact the competitiveness of the U.S. automotive sector, cautions PVMI director John Paul MacDuffie.

“There’s a vast amount of innovation in internal combustion engines to help these [fuel economy] goals, and it might not continue at that pace,” MacDuffie said in an interview with Knowledge@Wharton. “To have a bit of forcing pressure — not to one specific technical fix but to a technical goal — has actually been very valuable for getting innovation.” Without ambitious standards, MacDuffie questions what will incentivize U.S. manufacturers to keep up the pace of innovation, leaving them vulnerable to competition from European and Asian counterparts.

Listen to the interview here.